The Aged Care funding shortfall

by Eliza Littleton and David Richardson

In the budget speech the Treasurer referred to the “shocking cases of neglect and abuse” and announced a $17.7 billion package of measures which he claimed “brings our record investment in aged care to over $119 billion over the next four years.” He claimed the government is “committed to restoring trust in the system and allowing Australians to age with dignity and respect”.

Australians have been rightly shocked by repeated exposés of widespread mistreatment, neglect and even abuse of elders in our aged care system.[1] Long-standing problems in the system became even more acute during the COVID-19 pandemic, which posed such a danger to older Australians (especially those in residential care facilities): three-quarters of all deaths due to COVID-19 in Australia occurred in aged care facilities. In response to these concerns, the government appointed the Royal Commission into Aged Care Quality and Safety. The Commission compiled exhaustive evidence of systematic failures in the aged care system, identifying in particular the roles of inadequate government funding, undervalued and precarious employment arrangements, and the conflicted incentives of private for-profit providers in causing this crisis in care.  The Commission’s final report, issued in March 2021, contained 148 recommendations to urgently repair the system and provide better care to our seniors.

The Australia institute’s Centre for Future Work studied the means of financing the needs of the aged care sector and finding the approximately $10 billion per annum in urgent additional funding.[2] In launching our report Dr Jim Stanford, Director of the Australia Institute’s Centre for Future Work, and co-author of the report, said:

There is no immutable economic or fiscal constraint holding back the government from doing right by Australia’s elders. The only question is whether this government places enough priority on caring for seniors with the quality and dignity they deserve.[3]

The timing of some changes might be delayed by skills shortages or other physical constraints while many of the urgent needs can be met immediately. The Royal Commission singled out four concerns for immediate attention: food and nutrition, dementia care, the use of restrictive practices, and palliative care.[4] It suggested in recommendation 112 that no later than 1 July 2021 the daily fee for residential care providers be increased by $10 a day with an undertaking it be used for residents’ basic needs and “in particular their nutritional requirements.”[5] That would immediately address starvation and the associated complications.

So what has the government done?

The Government announced a big dazzling sum of $17.7 billion dedicated to fixing aged care, perhaps to distract from the minimal detail that came with it. To their credit they have attempted to come at the ‘aged care problem’ from different angles touching on many of the 148 Royal Commission recommendations. But as always, the devil is in the details and throwing a bunch of money at a problem will only work if that money is well targeted.

In the pro column the government has dedicated $3.2 billion to introduce the recommended $10 per resident Basic Daily Fee increase to residential aged care facilities conditional on improved quality, especially with respect to nutrition. What remains unclear is whether this extra $10 per person will be tied to improved quality outcomes for residents. As it is the budget description suggests the increased daily fee will be unconditional. Will it go towards improving nutrition or to increasing the number of staff in nursing homes? Or will providers simply use this initiative to increase profit, especially those providers reported to be making low returns.

In better news, dementia and palliative care services will see an immediate boost in funding. The budget committed money both to training staff in end-of-life and dementia care, but also to further develop the response to and regulation of chemical and physical restraints. The real test of whether this will be possible for providers to pull off lies with whether they have adequate staffing.

Has the government met the demands of the Royal Commission?

The general approach of the Royal Commission was to suggest a “new Act [that] must enshrine the rights of older people who are seeking or receiving aged care. This will leave no doubt to all involved in the system about the importance placed on these rights. A rights-based approach must guarantee universal access to the supports and services that an older person is assessed as needing.” That suggests a new standard for assessing progress in the administration of aged care; the extent to which these particular human rights are met through universal access to appropriate services at appropriate standards.

It is telling that the Treasurer avoided describing quality aged care as a right in his budget speech, because although they have committed ‘record funding’ this funding will not necessarily ensure quality care is universally accessible.

The $17.7 billion over five years works out to be a commitment of an extra $3.5 billion per year. This sounds great until you realise that the Government has also spent $4.5 billion propping up the aviation sector during COVID-19. It also falls short of the $10 billion per year of extra funding the Royal Commission recommended for aged care – an amount that could be raised by cancelling the stage three tax cuts for high-income Australians. This means the Government has missed the mark by $6.5 billion a year.

Funding shortfall aside, it is questionable whether the Government has met the challenge made by the Royal Commission.

One of the big-ticket items was funding an additional 80,000 Home Care Packages (HCP) over the next two years. Treasurer Frydenberg promised that this budget would focus on enabling people to stay at home for longer. Following through on this promise relies on doing away with the Home Care Package (HCP) waiting list, which stood at 97,000 elderly people at the end of 2020.  A closer look shows that the Government is only releasing 40,000 new HCP from July this year and will make another 40,000 wait until next year to receive the care they need for independent living. The remaining 17,000 will go without.

Inadequate staffing underpins many of the shortfalls in aged care and lies at the heart of providing quality care. Drawing on recommendation 86 of the aged care Royal Commission, the Government mandated 200 minutes per day of care in residential homes, including 40 minutes with a registered nurse. This is not the round the clock nurses on site recommended by the Commissioners, but it is a step in the right direction. What makes even less sense is why we are making vulnerable people wait until 2023 to see these measures – deemed urgent by the Royal Commission – implemented.

Funding went to training 33,800 new personal care workers over two years and increasing places in nursing homes, but this ignores the big issues of attracting and retaining workers in the notoriously low paid/overworked aged care sector. Registered nurses will receive minimal financial incentive to work in aged care, but for all the other new staff needed to raise the level of care the Government is relying on the demand will create supply argument.

> Back to Budget Wrap 2021

[1] Royal Commission into Aged Care Quality and Safety (2021).
[2] Richardson D and Stanford J (2021) Funding High-Quality Aged Care Services, May
[3] Australia Institute (2021) “New Research: Commonwealth Can Afford $10b for Aged Care Recommendations”, Media Release, 7 May.
[4] Royal Commission into Aged Care Quality and Safety (2021) Full Report Vol 1
[5] Royal Commission into Aged Care Quality and Safety (2021) Full Report Vol 1, p. 286.

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